How Healthy Stores Can Alleviate the ‘Choice Dilemma’

October 26, 2015

By Raj B. Shroff

It’s better to pay the grocer than the doctor. The idiom encapsulates the dilemma many Young People (a.k.a Millennials) face when deciding whether or not to spend more buying healthy products. Over the last decade, we’ve seen the rise of the “young invincibles,” a term coined by the health insurance industry, and floated regularly during the healthcare debate, to designate a small segment of young people (18-to-34-year-olds) willing to risk going without health care coverage. Although a potentially disastrous choice financially, it was a rational one because of fast-rising premiums and healthcare costs. But even the choice to opt-out is gone.

Young People can’t simply choose to forego health insurance and pay the grocer more. The law doesn’t allow for such a heedless embrace of invincibility. Millennials must, at minimum, pay for a plan, but that doesn’t mean they are choosing the grocer over the doctor, or vice versa, for that matter. What it does mean is many Young People are constantly juggling competing financial priorities around issues of personal health.

It’s not just about preference or risk-taking, but the balancing act of making a household budget work. After all, Young People are paying more to the doctor than ever. And, again, this is not by choice. Annual deductibles—or what a patient pays before insurance starts picking up the bill—has been rising steadily, with 80% of workers now burdened with deductibles, up from only 55% of eight years ago, according to the Kaiser Family Foundation. And the cost of these deductibles is greater than ever, on average $1,217, compared to $584 for individual coverage eight years ago. So even though Young People can’t avoid premiums, they are forgoing doctor visits to save money, and more than the general population, according to a recent study. Compared to 80% of Americans, Millennials are not scheduling doctor visits at a greater rate—93%.

Our adage about choice—doctor or grocer—is indicative of an ongoing dilemma Young People face. Stores trying to adapt to the massive cultural, economic and social change wrought by the Millennial generation, must understand how this paradox influences decision-making at the store shelf.

Millennials don’t want to deal with complications inside the store when it comes to choosing healthy. Costs—for anything—are already top of mind. Young People are struggling to match the earning power their parents enjoyed in their ‘20s. Millennials have less income than their parents, according to one recent study, with the median income for young adults about $2,000 less, when adjusted for inflation, than their parents. In such an environment, how can Millennials afford to pay more for healthy products?

In our latest consumer research study about choosing healthy products, we sought to understand whether consumers are willing to pay more for healthy. How stores can help consumers choose more wisely. How decisions made at the store shelf have a lasting impact on consumer health. And, lastly, how stores can diminish the paradox of choice at the store shelf.

The in-depth study, which not only included qualitative focus groups, but a quantitative consumer panel of 1,066 shoppers, isolated respondents to those with the proverbial “one foot in the door” of healthy living and eating. We defined this group as “healthy aspirationals,” or consumers hemming and hawing their way on the road to healthy. Some days they want to get there, other days they want to indulge, but in the aggregate, they aspire to do better.

Our research conclusions were unequivocal: Young People are more passionate and committed to making significant healthy changes than Boomer or Gen-X consumers—and despite a tenuous financial state, they are not averse to spending more to do so.

Overall, our top-line findings about Millennials spell good news across the board for stores. This consumer segment already purchases healthier more often than older generations—and despite earning less than their parents, are willing to pay slightly more for healthy products. Retailers must understand the larger social forces at work, and how the anxieties around choice influence the decision-making process.

The implications for retailers are twofold: One is psychological. Despite the hubris of invincibility, it indicates a massive shift to more healthy attitudes, compared to previous generations. Young People want to take on more personal responsible for staying healthy. This energy, motivation, and somewhat limited resources, are now being rationally directed toward prevention. That’s the sweet spot where stores must position themselves—the one area where the Millennial cohort can exert some practical control.

The second implication is for store strategy. It’s time to simplify the buying experience for consumers eager to embrace healthy, instead of exacerbating the anxiety many Young People face at the store shelf. It’s been more than 10 years since psychologist Barry Schwartz wrote his groundbreaking book, The Paradox of Choice: Why More is Less, in which he argued that fewer choices equate to less anxiety for shoppers, and that more choices lead to buyer paralysis. Although there’s been some debate in recent years about whether Schwartz’s research was replicable (a widespread problem in the social sciences) when it’s come to developing a strategic way for stores to empower consumers to embrace healthy eating, healthy living and wellness, his theory still stands, and seems more relevant than ever.

One area of immediate tactical change would be package design. During our research Millennials ranked brand and packaging as the biggest drivers of healthy purchases, more so than Boomers. We also learned that out-of-store media—such as digital coupons, online reviews, mobile apps and social media—ranked higher in influence on healthy purchase behaviors among Millennials than Boomers.

The time has come to simplify the decision-making process at the store shelf. Retailers can’t ignore, or make light of these very real, and frustrating quandaries Young People face. The moment has come for stores to embrace, empathize and empower Young People to navigate to a healthier lifestyle. Stores should be the one place where they can find honest and clear answers about what is and isn’t healthy.